Month: October 2018

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Being fully pre-approved means that the lender has agreed to have you as a client (you have a pre-approval certificate) and the mortgage broker has reviewed, approved ALL your income and down payment documents (as listed below) prior to you going house hunting. Many bankers will say your approved, you go out shopping and then they sorry you not approved due to some factor. Get a pre-approval in writing!

Excited! Of course. You are venturing into your 1st or possibly your next biggest loan application and investment of your life.

What documents are required to APPROVE your mortgage?

Being prepared with the RIGHT DOCUMENTS when you want to qualify your mortgage is HUGE; just like applying for a job or going for a job interview. Come prepared or don’t get hired (or in this case, declined).

I assist all my clients along the way to ensure any questions are asked and when you are my clients YOU are prepared UPFRONT and fully PRE-APPROVED before you go house hunting.

No stress, no running around, no surprises.

Why is this important?

You can have a leg up against the competition when buying your dream home as you can have a very short timeline (ie: 1 day to confirm vs 5-7 days) for “financing subjects”.

Think?: you’re the seller and you know the buyer doesn’t have to run around finding financing and the deal may fall apart? This is the #1 reason deals DO fall apart. You will likely get the home over someone who isn’t fully approved and has to have financing subjects. Home is yours and no-ones time is wasted.

If you just walked into the bank, filled an application and gave little or no documents, and got a rate – you have a RATEHOLD. This is NOT a pre-approval. This guarantees nothing and you will be super stressed out when you put an offer in, have 5-7 days to remove financing subjects and you need to get any or all of the below documents. That’s not fun is it? Use a broker ALWAYS…me preferably. We don’t cost you anything!

When you get a full pre-approval, you as a person(s) are approved; ie: the broker did their work of reviewing (takes a few days) to call your employer, review your documents, etc. All we have to do is get the property approved, which takes a day or two. Much less stress, fastest approval…faster into your home!

Here is exactly the documents you need MUST have (there is NO negotiation on these) to get your mortgage approved with ease. Keyword here is EASE. Banks/Lenders have to adhere to rules, audit files and if you don’t have any of these or haven’t been requested to supply them…a big FLAG that your mortgage approval might be in jeopardy and you will be running around like a crazy person 2 days before your financing subject removal.

Read carefully and note the details of each requirement to prevent you from pulling your hair out later.

Here is the list for the “average” T4 full-time working person with 5-15% as their down payment (there is more for self-employed, and part-time noted below):

Are you a Full-time Employee?

Last 2 paystubs: must show all tax deductions, name of company and have your name on it.

Any other income? Child Support, Long Term Disability, EI, Foster Care, part-time income? Bring anything that supports it. NOTE: if you are divorced/separated and paying support, bring your finalized separation/divorce agreement. With some lenders, we can request a statutory declaration from lawyer.

Notice of Assessment from Canada Revenue for the previous tax filed year. Can’t find it? you can request it from Rev Can to send it to you by mail (give 4-6 weeks for it though) or get it online from your CRA online Account.

T4’s for your previous 2 years.

90 day history of bank statement showing the money you are using to put down on your purchase.
Why 90 days? Unless you can prove you got the money either a sale of a house, car or other immediate forms of money (receipt required)…saved money takes time and the rules from the banks/government is 90 days. They just want to make sure you aren’t a drug dealer, borrowed the money and put it in your account or other fraud issues. OWN SOURCES = 90 days. BORROWED is fine, but must be disclosed. GIFT is when mom/dad give you money. Once you have an approval for “own sources” you can’t decide to change your mind and do gifted or borrowed. That’s a whole new approval.

Downpayments

Own Sources: For example for “own sources”: if you are a first time buyer and your money is in RRSP’s then, have your last quarterly statement for the RRSP money. If your money is in 3 different savings account, you need to print off 3 months history with the beginning balance and end balance as of current. The account statements MUST have your NAME ON IT or it could be anyone’s account. I see this all the time. If it doesn’t print out with your name, print the summary page of your accounts. This usually has your name on it, list of your accounts and balances. Just think, the bank needs to see YOU have X$ in your (not your mom’s or grandparents) account.

GIFT: If mom/dad/grandparents are giving you money…then the bank needs to know this as the mortgage is submitted differently (this is called a GIFT).

If you are PART-TIME employee?

All of the above, except you will need to bring 3 years of Notice of Assessments. You need to be working for 2 years in the same job to use part-time income. You can have your Full-time job and have another part-time gig…you can use that income too (as long as it’s been 2 years).

90 day history of bank statement showing the money you are using to put down on your purchase.

Now let’s get started! Give me a call 778-808-7756 to start your mortgage plan, find out what you want from your mortgage, and get you moving along, having fun and being excited! There are so many options for you.

Going to the bank direct is such a big dis-service to you. That is like walking into Ford and asking for a Mercedes or Toyota. As a broker: I am FREE! I work with ALL the banks, know ALL the rules, get the bank you choose pays me to give you great service and a fantastic product. There are over 300 of them…so don’t sell yourself short.

Nothing weighs heavy on one’s shoulders than owning a home and getting behind on your Canada Revenue Taxes. Most banks will not be able to help you refinance your home to pay them off as CRA has 1st dibs on your house and assets. We have clients owing anywhere from $5,000- $300,000 in back taxes and have threatening letters from CRA that would keep anyone up at night.

There are options and strategies we can assist with financing your CRA debts:

We use alternative lenders that charge higher fees/rates for a 1-year term

short term 2nd mortgage to pay off your CRA debts and then refinance back with your lender.

a late-filing penalty –5% of the amount of tax you owe, plus 1% for every month that your return is late, for up to 12 months. That adds up to a maximum of 17% of the tax you owe.

interest – at the prescribed interest rate on the amount you owe, beginning on May 1. You’ll also be charged interest on any late-filing penalties. Interest is compounded daily, not monthly or annually. The prescribed interest rate can change every 3 months.

If you miss the deadline again

The late-filing penalties are doubled. For example, if the CRA charged you late-filing penalties for any of the 3 previous years, you would pay a penalty of up to 50% made up of:

10% of the taxes you owe, plus

2% of the taxes you owe for each full month that your return is late, to a maximum of 20 months.

Client success stories are what make our job WORTH IT (We think most mortgage brokers would agree). So, with this in mind, we are sharing a recent client’s story that allowed them to not only purchase the home they wanted, but also pay down their own debt.

Mortgage Problem:

We had a young couple with two young children come to us looking to buy a detached home with a rental suite. They had several thousand dollars of consumer debt they had yet to pay off, and very little funding for the down payment. The husband was employed, and his wife ran a small business from their home. Their combined income was average, but with their significant amount of debt they weren’t sure they would be able to buy their dream home.

A close friend recommended that they visit a mortgage broker, and instantly we were able to see how we could help them not only find the down payment funding, but also help them pay down their debt.

Mortgage Solution:

Step 1: By the numbers.
First up, we looked at the numbers we would be working with to make this happen.

Step 2: Collect documentation.
For this particular mortgage we collected:
● Lease agreements for two suites (loft and basement)
● Notice of assessment and T1 generals from the last two years
● Standard income documentation for full-time employment
● Confirmation of self-employment for the last two years

Step 3: Calculate the total debt services ratio.
We took the above numbers and worked with them to present a debt service ratio that started out as 47.74% and brought it down to 42.5%

Step 4: Share the mortgage solution!
The down payment was provided by the parents and the rental income from the subject property was used. All their remaining debts were paid with $25,000 cash back from the lender who also provided an interest only payment Line of Credit to cover both the mortgage and consumer debt.

Our clients were thrilled to be able to purchase their dream home and to have their consumer debt under control. We are proud to be able to help couples like this to make their dreams become a reality, and really, all it took was 4 simple steps to get them into their home! If you have any questions, contact a Dominion Lending Centres Mortgage Professional near you.

Repost from:

Geoff Lee
GEOFF LEE
Dominion Lending Centres – Accredited Mortgage Professional
Geoff is part of DLC GLM Mortgage Group based in Vancouver, BC.